Solution

ID: past-exam-of-the-probability-statistics-and-options-i-course-of-the-university-of-oxford/2009/o/1/solution

For the continuous distribution in the question, maps the support monotonically from zero to one. For , strict monotonicity gives
Thus is uniform on , the probability integral transform.
The order statistics are the sample values sorted increasingly, . Monotonicity of makes the th order statistic of independent uniforms. Its density is , giving
This follows either by beta integrals or by the equal expected lengths of the uniform spacings.
For the stated log-logistic cumulative distribution,
Therefore plot vertically against horizontally, with plotting positions . A plausible model gives an approximately straight line, with slope and intercept . This specifies the axes explicitly, since reversing them would invert the slope.

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